Fortnightly - ARRA< advanced metering infrastructurehttp://www.fortnightly.com/tags/arra-advanced-metering-infrastructure
enAMI Logjamhttp://www.fortnightly.com/fortnightly/2013/08/ami-logjam
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Market forces and fickle policies have delayed the smart meter revolution.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Bob Heile</p>
</div></div></div><div class="field field-name-field-import-bio field-type-text-long field-label-inline clearfix"><div class="field-label">Author Bio:&nbsp;</div><div class="field-items"><div class="field-item even"><p><b>Bob Heile</b>, Ph.D, is Chair of the IEEE 802.15 Working Group on Wireless Personal Area Networks and was co-chair of the IEEE 2030 Task Force 3 on Smart Grid Communications. He is also is Chairman Emeritus and Chief Technologist for the ZigBee Alliance.</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - August 2013</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>The power industry in the United States today has installed about 40 million residential interval meters, thanks in part to the American Recovery and Reinvestment Act (ARRA) passed by Congress in 2009, which basically split the cost with host utilities.</p>
<p>Though the potential value of those meters and the advanced metering infrastructure (AMI) of which they are a part is well understood, that value remains largely unrealized. Meanwhile, developing a positive business case in the post-stimulus era for a new AMI project is difficult, though not impossible.</p>
<p>Further, the unrealized value of installed meters and a positive business case for new AMI projects are often tangled up in discussions of related technology options. These are all separate if tangentially related issues that could benefit from being disentangled and examined each in turn.</p>
<h4>Smart Meter Stimulus</h4>
<p>The ARRA-funded metering projects have, of course, delivered significant value. AMI provides utilities with improved outage detection, end-of-line sensors for voltage control, and remote connection and disconnection of customer accounts. These benefits are essentially efficiencies and, as such, they comprise only part of AMI’s value. </p>
<p>To realize the full value of AMI systems, utilities will need to take further steps. Some have undertaken pilot projects to aid in developing customer programs. Others are making it easier for customers to access the meter data even without full supporting programs. Providing customers with meaningful energy use data, often via web portals, is a first step toward enabling customers to manage their energy use, cut demand at the peak, and balance load against supply. This effort has been aided by the U.S. DOE’s Green Button initiative, which provides a platform for presenting energy consumption data in a useful format. But providing time-of-use (TOU) or other dynamic pricing programs to enable customers to cut costs and defer expansion of peak capacity remains an unrealized if often promised benefit.</p>
<p>To be fair, dynamic rates and many other AMI capabilities require new, upgraded, or outsourced customer information systems and significant investment in meter data management (MDM). Meanwhile, a core group of the growing population of smartphone users are forging ahead on their own, finding apps, web data, home sensors and third-party services to monitor and control high-priority home loads, even without formal utility programs.</p>
<p>It’s worth considering where the AMI business case has worked, and under what circumstances. </p>
<p>Texas’ retail energy providers, in a competitive market, have come closest to using advanced meters and the data they generate to offer differentiators such as pricing programs and rewards to win customers. Yet the poles-and-wires companies own the meters. CenterPoint Energy, for instance, serves the Houston area, which receives a high incidence of lightning strikes and related power outages. When AMI’s contribution to identifying the location of a fault is added to a highly sectionalized distribution system, outage detection and restoration is vastly improved. Add that functionality to voltage control, remote connect and disconnect capabilities, and market-driven customer value propositions, and it creates a positive business case based on multiple value streams. </p>
<p>Keep in mind, however, that CenterPoint had the advantage of $200 million in ARRA funding to make its AMI business case pencil out.</p>
<p>In California, circa 2005, advanced meters were seen as enabling demand response programs to reduce utilities’ reliance on expensive spot market purchases to meet peak demand and avoid or defer increasing peak generation capacity. Thus California’s investor-owned utilities (IOU) were among the first to adopt AMI – again, aided by ARRA funds. Today, energy costs, rather than being an expanding problem, aren’t an issue, so the whole business model has changed. Additionally, California utilities don’t face the same competitive drivers that exist in the Texas market among retailers. No longer is there a compelling incentive and business case to make the substantial additional investment. Consequently the implementation of customer programs has slowed greatly in California.</p>
<p>Oklahoma Gas &amp; Electric installed smart meters for the system efficiencies already cited, made admirable efforts at customer education, and offered opt-in dynamic pricing that, in fact, does allow participants to shift electricity consumption to off-peak hours, saving money on their bills. OG&amp;E’s dynamic pricing offer has made it a quiet star in AMI rollouts. Note that OG&amp;E, too, made the business case work with $130 million in ARRA funds.</p>
<h4>AMI after ARRA</h4>
<p>The business case for new AMI projects can be stated thus: without federal subsidies covering a good chunk of the cost, it’s difficult to develop the critical mass of bundled value streams to justify such a venture. The current dearth of requests for proposals (RFP) for new AMI systems in the United States reflects this state of affairs. In the absence of policy drivers for energy efficiency or competition, only larger market forces such as energy scarcity, high cost, or regulatory mandate will alter the equation. </p>
<p>The relationship of technology to the business case is worth reviewing as well. At this stage, one should have little to do with the other.</p>
<p>First, the advancement of metering standards merits applause. A decade ago, utilities saw no particular need for standards for metering communication, such as automated meter reading (AMR), as long as they could support the technology for the capital life of the device. Interoperability was moot. Today, utilities understand that a variety of interoperable solutions can be applied in a heterogeneous service territory, which requires smart meters to incorporate diverse communication protocols for meter-to-utility and meter-to-home area network (HAN) functionality. Besides, standards create economies of scale, which lower costs and improve the business case. </p>
<p>Second, quasi-religious wars over technology options have resulted in heated rhetoric from evangelists on all sides for each particular option, resulting in unnecessary confusion as to which technology choice is the right choice.</p>
<p>In fact, in the world of networking, there’s the possibility of success despite making a wrong choice, since networks routinely use bridges and gateways to achieve whatever level of connectivity is needed. Granted this isn’t without some cost, but wholesale stranding of assets shouldn’t be a concern.</p>
<p>Every communication protocol, for instance, has its strengths and weaknesses and likely will be applied in combinations that best serve the business case. And the so-called “god boxes” that enable popular protocols to talk to each other will ensure that whatever the combinations, they can be made to work.</p>
<p>ZigBee, which uses the IEEE 802.15.4 standard, was developed with the HAN in mind and it’s been incorporated into the vast majority of the installed base of 40 million smart meters in the United States. ZigBee is extensible and optimized to work well in a sensor mesh network environment. Wi-Fi – IEEE 802.11 – makes a rational choice, under the right circumstances, but is optimized for broadband wireless local area networks (WLAN) as opposed to large sensor networks. Power line carrier (PLC) is a good technology for apartments, for instance, where you need some effective way to go from a central metering room to each apartment. (IEEE 1901 is the PLC standard.) In the absence of an existing building-wide sensor network, wireless likely won’t have adequate range, and pulling new wire isn’t practical.</p>
<p>Despite the rhetoric, each of these communications protocols, and others, will have their place in an integrated solution. For sensor networks, as an example, IEEE 802.15.4 together with ZigBee, will likely be the main core of the solution. For WLANs and broadband stuff, the prevailing standard would be IEEE 802.11 (Wi-Fi). Other technologies will fill in the blanks.</p>
<p>Utilities certainly should pick the technologies and protocols that have the highest probability of needing the least additional attention down the road. But if the selection turns out to be a less-than-perfect solution, it doesn’t need to be a forklift upgrade and it doesn’t need to become a stranded asset. That’s extremely important to understand, given the amount of noise and confusion in the marketplace created by competing claims based on technology options and benefits. </p>
<h4>Don’t Forget the Customer</h4>
<p>Let’s add one more important element to this mix: the customer, sometimes also known as the ratepayer. The customer is being asked to pay for smart metering and therefore rightly expects benefits in return. That expectation is aligned with state-level public utility commissions’ fundamental role of ensuring that utility investments are prudent and provide value to those footing the bill. Both consumers – sometimes via state consumer advocates – and regulators are demanding demonstrable value in exchange for approving smart meter business cases.</p>
<p>Whether utility customers in fact find AMI investments worthwhile isn’t an academic question. While public awareness of smart meters and smart grid remains fairly low, according to recent surveys, that’s not likely to remain so. With AMI, utilities have begun a process of raising their customers’ awareness, and that awareness will be difficult, like the proverbial genie, to put back into the bottle. How utilities respond to their customers’ perception of value and desire for options and benefits could determine their future business model. Third parties would like to use customer meter data to offer new products and services, rivaling or overtaking the utilities’ presumed ownership of their customers. </p>
<p>Utility efforts to raise consumer awareness are a two-edged sword. First, the modern consumer has come to expect quality customer service and an app for nearly everything. Why not for their electricity service? This isn’t an easy expectation for utilities to fulfill. Second, the modern consumer population is hardly monolithic. At least a handful of distinct customer segments exist, with different motivators at work. Smart meters and updated customer information systems should allow utilities to provide programs tailored to each of these customer segments, but that’s an AMI value largely unexploited today. </p>
<p>Over time, as networks grow and experience is gained, technologies that are good for the job they’re assigned – and that provide vendors with the best margins – will emerge as leading options. The outcome will be market-driven. But that’s a multi-year process that’s just begun to unfold. In the near-term, ARRA-funded pilot projects should soon yield useful field performance data that could provide a market level-set. </p>
<p>That’s on the utility side of the meter. On the customer side, as the number of devices in a house grows, people will find it either easy or tough to develop their in-home networks. Third parties will create home networking platforms and devices and offer installation and maintenance services. The retail environment will provide a good reflection of the market’s direction in that regard. Do-it-yourselfers will begin the process but, eventually, publications such as <i>Consumer Reports</i> will weigh in on product and service usefulness and value, reducing the investment risk for homeowners. In fact, we’ll likely see a significant expansion of home energy management products on the shelves as early as this Christmas season. That’s a development worth watching. </p>
<p>It’s important to understand that innovation doesn’t stand still while decisions are being made. Ubiquitous smartphone use and nimble third parties might well develop alternatives to the utility-based AMI business case to serve customer needs. It presents an interesting challenge to utilities on how to best serve their customers and meet the needs of their investors. Perhaps this will evolve into some creative partnerships with those third parties. For utilities, making an active decision in that regard, rather than acquiescence, is probably a wise move.</p>
<h4>Building Value</h4>
<p>Today, the business case for AMI remains uncertain, in the absence of external drivers, such as subsidies or policies for energy efficiency or competition. Circumstances, too, are working against some of the initial drivers for AMI. The cost of electricity remains relatively low due to a drop in consumption driven by the recent recession as well as the parallel abundance and relatively low cost of natural gas. </p>
<p>What might change the uncertain AMI business case for utilities? Energy price spikes or energy scarcity, certainly. The aforementioned policy drivers for efficiency and competition also might sweeten a business case. Conventional wisdom suggests further federal subsidies won’t be forthcoming.</p>
<p>Thus the U.S. market for new AMI projects is at a point of great ambiguity. No real policy drivers appear to be in play. In the U.S. we have an installed base of 40 million meters with expensive, arduous tasks remaining to realize smart meters’ full potential value. One could argue that there might be a case for urgency – who will step up and own the customer? – but so far that argument isn’t having much of an effect. </p>
<p>Eventually market forces and policy drivers likely will change in ways that improve the business case for advanced metering. Until then, it might be up to the industry to cease the religious wars that bring confusion and conflict, and to focus instead on developing integrated solutions that increase the capabilities and effectiveness of metering technology options.</p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/energy-policy-legislation">Energy Policy &amp; Legislation</a></li><li class="taxonomy-term-reference-1"><a href="/article-categories/etrm-markets">ETRM &amp; Markets</a></li><li class="taxonomy-term-reference-2"><a href="/article-categories/ami">AMI</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/1308-FEA3.jpg" width="1500" height="963" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/interval-meter">Interval meter</a><span class="pur_comma">, </span><a href="/tags/american-recovery-and-reinvestment-act">American Recovery and Reinvestment Act</a><span class="pur_comma">, </span><a href="/tags/arra-advanced-metering-infrastructure">ARRA&lt; advanced metering infrastructure</a><span class="pur_comma">, </span><a href="/tags/ami">AMI</a><span class="pur_comma">, </span><a href="/tags/outage-detection">outage detection</a><span class="pur_comma">, </span><a href="/tags/voltage-control">voltage control</a><span class="pur_comma">, </span><a href="/tags/doe">DOE</a><span class="pur_comma">, </span><a href="/tags/green-button">Green Button</a><span class="pur_comma">, </span><a href="/tags/time-use">Time-of-use</a><span class="pur_comma">, </span><a href="/tags/tou">TOU</a><span class="pur_comma">, </span><a href="/tags/meter-data-management">meter data management</a><span class="pur_comma">, </span><a href="/tags/mdm">MDM</a><span class="pur_comma">, </span><a href="/tags/texas">Texas</a><span class="pur_comma">, </span><a href="/tags/iee">IEE</a><span class="pur_comma">, </span><a href="/tags/centerpoint">CenterPoint</a><span class="pur_comma">, </span><a href="/tags/restoration">restoration</a><span class="pur_comma">, </span><a href="/tags/california">California</a><span class="pur_comma">, </span><a href="/tags/oklahoma">Oklahoma</a><span class="pur_comma">, </span><a href="/tags/opt-0">Opt-in</a><span class="pur_comma">, </span><a href="/tags/oge">OG&amp;E</a><span class="pur_comma">, </span><a href="/tags/efficiency">efficiency</a><span class="pur_comma">, </span><a href="/tags/regulatory-mandate">regulatory mandate</a><span class="pur_comma">, </span><a href="/tags/automated-meter-reading">automated meter reading</a><span class="pur_comma">, </span><a href="/tags/amr">AMR</a><span class="pur_comma">, </span><a href="/tags/interoperability">Interoperability</a><span class="pur_comma">, </span><a href="/tags/home-area-network">Home area network</a><span class="pur_comma">, </span><a href="/tags/han">HAN</a><span class="pur_comma">, </span><a href="/tags/zigbee">Zigbee</a><span class="pur_comma">, </span><a href="/tags/wireless-local-area-networks">wireless local area networks</a><span class="pur_comma">, </span><a href="/tags/wlan">WLAN</a><span class="pur_comma">, </span><a href="/tags/power-line-carrier">power line carrier</a><span class="pur_comma">, </span><a href="/tags/plc">PLC</a><span class="pur_comma">, </span><a href="/tags/customer-segment">customer segment</a><span class="pur_comma">, </span><a href="/tags/customer-information-system">customer information system</a> </div>
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Wed, 31 Jul 2013 20:13:53 +0000meacott16689 at http://www.fortnightly.com